On August 1, 2005, the Securities and Exchange Commission (SEC
or Commission) approved an amendment to Rule 7010(k), adding
an enterprise fee structure and lowering another fee related to the
receipt of Real-Time TRACE transaction data. This fee change will
enable an enterprise such as a broker-dealer to display Real-Time
TRACE transaction data on an unlimited number of internal display
devices for a fee of $7,500 per month. The fee for Level II Full
Service Web Browser Access also has been lowered, so that the
charge for the first user ID obtained for such access will be $50 per
month rather than the current $80 per month.

The rules, as amended, are set forth in Attachment A.

The amendments become effective October 1, 2005.

Questions/Further Information

Questions concerning this Notice should be directed to James L.
Eastman, Assistant General Counsel, Office of General Counsel
(OGC), Regulatory Policy and Oversight (RPO), at (202) 728-6961;
Sharon K. Zackula, Associate General Counsel, OGC, RPO, at (202)
728-8985; or David Lefferts, Associate Vice President, Corporate
Debt, at (212) 858-4389.

Background and Discussion

On August 1, 2005, the SEC approved an amendment to Rule 7010(k)(3)(A)(i), the Bond
Trade Dissemination Service (BTDS) Professional Real-Time Data Display Fee, to enable
an enterprise such as a broker-dealer to display Real-Time TRACE transaction data
within the enterprise on an unlimited number of internal display devices for a fee of
$7,500 per month.1 The SEC also approved an amendment to Rule 7010(k)(1)(A), Web
Browser Access, to lower the fee for Level II Full Service Web Browser Access, so that
the charge for the first user ID obtained for such access will be $50 per month rather
than the current $80 per month.

NASD has modified the TRACE fee structure because NASD believes the new structure
may significantly increase the use of Real-Time TRACE transaction data among users
of such data (Subscribers) such as registered representatives, investment advisors, and
other persons serving retail investors, as well as address cost concerns that have been
expressed by members. NASD believes that broadening the distribution of Real-Time
TRACE transaction data will facilitate its use by persons who provide brokerage
and/or advisory services to retail investors, and will provide such professionals with
an additional tool to better serve and inform retail investors. Moreover, broadening
the distribution of Real-Time TRACE transaction data is likely to have an incremental,
beneficial effect on corporate bond market transparency and pricing by generally
raising the level of awareness and overall knowledge of specific bond issues as well
as the bond market generally.

Proposed "Enterprise" Fee

Currently, NASD charges Subscribers $60 per month, per terminal (the BTDS Professional
Real-Time Data Display Fee) to display Real-Time TRACE transaction data. Members
have indicated that this $60 per month, per terminal charge is cost prohibitive for
organizations with large numbers of potential internal users of the data. Subscribers
serving large numbers of retail investors have indicated that they likely would
distribute Real-Time TRACE transaction data much more widely within their
organizations if the costs were reduced.

To address these concerns, NASD has amended Rule 7010(k)(3)(A)(i) to provide
Subscribers the option of paying a flat, enterprise fee of $7,500 per month instead of
$60 per terminal (i.e., per screen or interrogation or display device). This amendment is
intended to benefit Subscribers that have a large staff of potential internal data users
who desire access to Real-Time TRACE transaction data. Instead of paying multiple $60
BTDS Professional Real-Time Data Display Fees, a Subscriber would have the option to
pay a flat fee of $7,500 per month to display Real-Time TRACE transaction data on an
unlimited number of internal terminals/workstations.

The proposed amendment to Rule 7010(k)(3)(A)(i) will apply only to a Subscriber's
internal display of Real-Time TRACE transaction data and will be independent of
access method or data vendor. The proposed $7,500 enterprise fee option will include
unlimited terminal display use for individual access for all of a Subscriber's employees
and the employees of certain of its corporate affiliates.2

Level II Full Service Web Browser Access Fee

To encourage use of Real-Time TRACE transaction data among Subscribers of varying
sizes, NASD also has amended Rule 7010(k)(1)(A) to reduce the fees paid by Subscribers
who receive Real-Time TRACE transaction data through Level II Full Service Web
Browser Access. Such smaller Subscribers are unlikely to directly benefit from the new
enterprise pricing structure.

Currently, the implicit cost for Level II Full Service Web Browser Access used to receive
Real-Time TRACE transaction data is $60 per month (per user ID).3 NASD has reduced
the cost of the first user ID per Subscriber to receive Level II Full Service Web Browser
Access from $80 per month to $50 per month. This change will reduce a Subscriber's
marginal cost for the data portion of Level II Full Service Web Browser Access for the
first user ID by 50 percent to $30 per month.

2 A Subscriber wishing to take advantage of this
option must first enter into an agreement
directly with NASD, which in turn will notify
the data vendors with which the Subscriber
does business to provide blanket permission for
use of Real-Time TRACE transaction data to any
user within that organization. A Subscriber
interested in this option should contact NASD's
TRACE group at (888) 507-3665.

3 Level II Full Service Web Browser Access today
costs $80 per month. However, Level II Full
Service Web Browser Access also grants users
Level I Web Trade Report Only Browser Access
(for trade reporting), which otherwise would
cost an additional $20 per month per user ID.
Therefore, prior to the fee changes adopted by
NASD the marginal cost of Level II Full Service
Web Browser Access was $60 per month, per
user ID.

ATTACHMENT A

7010. System Services

(a) through (j) No change.

(k) Trade Reporting and Compliance Engine (TRACE)

The following charges shall be paid by participants for the use of the Trade Reporting and Compliance
Engine ("TRACE"):

System Fees

Transaction Reporting Fees

Market Data Fees

Level I Trade Report Only Web
Browser Access — $20/month per
user ID

Level II Full Service Web Browser
Access — $80/month per user ID,
except that the charge for the first
such user ID shall be $50/month

Trades up to and including
$200,000 par value — $0.475/
trade;
Trades between $201,000 and
$999,999 par value — $0.002375
times the number of bonds
traded/ trade;
Trades of $1,000,000 par value
or more — $2.375/trade

BTDS Professional Real-Time Data
Display — $60/month per terminal,
or a flat fee of $7,500/month
entitling Professionals to make
unlimited internal use of Real-Time
TRACE transaction data on any
number of interrogation or display
devices

There are three methods by which a member may report corporate bond transactions that are reportable
to the Association pursuant to the Rule 6200 Series. A member may choose among the following methods to
report data to the Association: (a) a TRACE web browser; (b) a Computer-to-Computer Interface ("CTCI") (either
one dedicated solely to TRACE or a multi-purpose line); or (c) a third-party reporting intermediary. Fees will be
charged based on the reporting methodology selected by the member.

(A) Web Browser Access

The charge to be paid by a member that elects to report TRACE data to NASD via a TRACE web
browser shall be as follows: $20 per month, per user ID for Level I Web Trade Report Only Browser Access
and $80 per month, per user ID for Level II Full Service Web Browser Access, except that the charge for the
first such user ID for Level II Full Service Web Browser Access shall be $50 per month.

(B) No change.

(C) No change.

(2) Transaction Reporting Fees

For each transaction in corporate bonds that is reportable to the Association pursuant to the Rule 6200 Series, the following charges shall be assessed against the member responsible for reporting the transaction:

(A) through (C) No change.

(3) Market Data Fees

Professionals and Non-Professionals may subscribe to receive Real-Time TRACE transaction data disseminated
by NASD in one or more of the following ways for the charges specified, as applicable. Members, vendors and other
redistributors shall be required to execute appropriate agreements with NASD.

(A) Professional Fees

Professionals may subscribe for the following:

(i) Bond Trade Dissemination Service ("BTDS") Professional Real-Time Data Display Fee of
$60 per month, per terminal charge for each interrogation or display device receiving Real-Time
TRACE transaction data, or a flat fee of $7,500 per month entitling Professionals to make unlimited
internal use of Real-Time TRACE transaction data on any number of interrogation or display devices.